Malaysia Goes Electioneering

Malaysia’s Prime Minister Abdullah Ahmad Badawi, hampered by the growing perception of a weak and divided national coalition, facing an uncertain economy and rising crime, in the middle of what is by far the biggest scandal in the 45-year history of the country’s judiciary, has called for March 8 national elections that could turn out to be a disaster for his party, the United Malays National Organisation.

And then again, maybe not. Virtually since the coalition of ethnic political parties was born, political analysts have been predicting its demise. And just as often, the country’s successive prime ministers have ended up laughing in their faces.

This time, there are some real threats, raising the question why he called the election just two and a half years into his second term –and during the slack period after the Lunar New Year, which has antagonized Chinese voters. In particular, Malaysia’s ethnic Indians, who comprise 7.1 percent of the country’s population, appear to be deserting the scandal-ridden Malaysian Indian Congress in droves. However, given the size of their cohort in the general population, they are not expected to have a big impact.

Ethnic Chinese seem equally fed up with the Malaysian Chinese Association, which is currently enmired in a sex scandal involving one of its top political figures.

The Chinese, who make up another 24 percent of the population, are also increasingly alienated by furious proclamations of superiority and threats from the majority Malay population, who see the Chinese as having stolen their economic birthright. Urban ethnic Malays are disgruntled at the sight of a large population of rent-seeking UMNO stalwarts who they believe are robbing the place blind.

Anwar Ibrahim, the de facto leader of the opposition Parti Keadilan Rakyat, or People’s Justice Party, held a press conference in Hong Kong Wednesday to charge that Abdullah Badawi had called the election for March because Anwar, jailed in 1999 on sexual perversion and corruption charges that many observers regard as trumped up, is barred from running for office until April. Anwar said Wednesday that Parti Keadilan candidates who are elected to office would likely step aside for a by-election once he is eligible to run.

Whether he can run or not, the election will be as much a test for Anwar as it is for Abdullah Badawi. He has staked his political future to Keadilan, a multiracial opposition party, instead of suing for peace and rejoining UMNO, as many another rebel has done in the past. In that regard, he is seen as a traitor by many Malays. The question is whether his opposition coalition can wean Malays in particular away from the party that has provided them with decades of economic uplift under the country’s New Economic Policy, established in 1969 as a minority affirmative action program for an ethnic majority.

Abdullah Badawi faces his sternest test as prime minister. He followed one of Southeast Asia’s most charismatic (if flawed) figures, Prime Minister Mahathir Mohamed, into office as Mahathir’s anointed successor only to immediately start dismantling the former leader’s cherished projects, enraging the octogenarian former leader, who has not ceased to attack him since.

Widely seen as honest himself, he has clearly had to bend to the political wishes of UMNO stalwarts to allow some of the less practical projects to go ahead.

Among these white elephant projects, many of them vastly overbid by firms close to UMNO, are double-tracking the main rail line to Thailand, a submarine cable to transmit power from the controversial Bakun Dam in Sarawak to Peninsular Malaysia and a trans-peninsular oil pipeline that most analysts think is unnecessary and will be enormously costly. Nonetheless, real construction growth hit 4.5 percent in the first three quarters of 2007, a strong reverse from three years of contraction. Abdullah Badawi has considerable going for him.

Despite Anwar’s claim that the economy is going sour, real gross domestic product growth is expected to surpass 6 percent when final 2007 figures are tallied. Despite claims that foreign direct investment has fallen abysmally, investment inflows are rising, particularly from the Middle East. In advance of the election, the government has been priming the economic pump with infrastructure projects.

On the private sector side, rising commodity prices, particularly for palm oil and crude, have produced a bonanza. In particular, private consumption growth appears to be driving GDP, partly on commodity prices, which are crucial to UMNO’s constituencies in the kampungs, or rural villages. Palm oil revenues from both domestic use and exports rose to RM95 billion in 2007, about 15 percent of GDP. Cheap labor by at least 2.3 million registered foreign workers and hundreds of thousands of other illegal ones – despite election-year rhetoric to kick them out – has kept labor costs low in the plantations and construction.

The question is whether the economy is close to the top of its cycle and could be on its way down. Exports comprise 110 percent of GDP, and the United States, which appears to be entering a recession, is the country‘s biggest trading partner, with trade of at least MR170.8. billion in 2006, and probably a lot more than that, since a major part of Malaysia’s manufactured exports go to Singapore, a major US trading partner, for re-export.

Although there have been complaints about inflation, the fact is that the government has been using subsidies, now estimated at US$10 billion a year, to hold down consumer prices on fuel, flour and sugar prices. Although the CPI rose just 2.3% last year, the brunt of the rise was in food and drink, which rose at a 3.8% rate through November, and that is the place where consumers see inflation and grumble about it.

It remains to be seen if a benign economic outlook can deter continuing attrition from the Barisan Nasional. UMNO seems to many Malaysians to be a tired party unable to wean itself away from the government teat. There is widespread disgust about the scandals.

Abdullah Badawi himself has begun to manage down expectations, saying the Barisan’s majority will be reduced. How reduced that will be is hard to say. One political analyst in Malaysia said it will be logical to expect tension. With Indians and Chinese fleeing the Barisan, perhaps for the opposition, perhaps just opting out of the system, the coalition will depend on ethnic Malays to remain in power. And to keep them, he says, there will be more keris-waving over the next month, a reference to fiery threats by UMNO figures, particularly in the Youth wing of the party, to bathe the Malay ceremonial knife in Chinese blood if ethnic Malay rights are threatened.

Will that raise ethnic tensions beyond normal levels? The country to this day acts as if the riots of 1969 took place a few months ago, and backs away from violence. Accordingly there could be some white knuckles for investors, but it probably will back away again.

What has happened in the past is that the coalition has the money and the resources to deliver the vote. There are perennial complaints of rigged elections. But the coalition’s power is in money – money to hire the buses and drivers to round up rural Malays and get them to the polls, to organize and do the crucial mechanics of electioneering and to buy them at least lunch if not more.

Those powers by and large are not available to the opposition parties, hamstrung as they are by the fact that virtually all the sources of information dissemination are in the hands of the establishment. Whatever the polls show, and in the past they have shown the coalition to be in trouble, don’t be surprised if, on March 9, the Barisan Nasional still has its historic two-thirds majority on the Dewan Rakyat, or parliament, and the opposition remains on the outside, looking in.